Lohar Chawl, Mumbai’s largest wholesale market for electrical goods, expects a recovery in demand ahead of the festival season, with distributors restocking after the implementation of the Goods and Services Tax.
Sales crawled in the weeks ahead of GST rollout on July 1 as traders were sceptical about the effect of the nationwide tax on their business, and cut down on stock, according to Niren Dharia, vice-president of Electrical Merchants’ Association.
“It was a short-term disruption. Volumes picked up towards the second half of July and in August as dealers have got a better understanding of billing and compliance issues,” said Dharia. He sees business returning to the April-May level by mid-September.
The sentiment at Lohar Chawl is in line with a report by Ambit Capital that said businesses of electrical companies will recover to nearly 90 percent of pre-GST level in the first half of August, led by an uptick in channel re-stocking and improvement in distributor-retailer sales.
While LED lights and fixtures attract 12 percent GST, cables, wires and switchgears are in the highest bracket of 28 percent. With many festivals coming in the next few months, Dharia said, the retail demand is also on the rise. Prices have largely remained weak post-GST, he said.